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U.S, EU, Japan to Cooperate Against Excess Capacity

Friday, December 15, 2017
Sandler, Travis & Rosenberg Trade Report

The trade ministers of the U.S., the European Union, and Japan announced Dec. 12 an agreement to enhance trilateral cooperation in the World Trade Organization and other forums to address “severe excess capacity” in key manufacturing sectors, including steel. According to a joint statement, the ministers will seek to eliminate practices by third countries that exacerbate this problem, including government-financed and -supported capacity expansion, unfair competitive conditions caused by large market-distorting subsidies and state-owned enterprises, forced technology transfer, and local content requirements and preferences.

The announcement follows the recent release of a report by the Global Forum on Excess Steel Capacity that the U.S. panned but the EU praised. The Office of the U.S. Trade Representative said the report included “many helpful policy prescriptions” but that “meaningful progress” would only come through “immediate and sustained concrete action by all steelmakers.”

USTR said that until such action is taken the U.S. will not hesitate to use other tools to deal with the problem. This could include trade restrictions resulting from a national security review expected to be concluded in early 2018. A Reuters article characterized the Dec. 12 announcement as an effort by the EU and Japan to preempt or at least slow any such unilateral steps by the U.S. An Inside US Trade article added that the announcement also showed that the U.S. “has not given up on the WTO as an institution.”

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